National Assembly deputies proposed reducing income tax for small and medium enterprises by 2% compared to the current level, to encourage the development of this sector.

At the conference of full-time National Assembly deputies on March 26, there was a proposal to reduce income tax for small and medium-sized enterprises by 2% compared to the current level, to encourage the development of this sector.

Currently, businesses are subject to a 20% income tax rate , except for groups that enjoy incentives. A 2% reduction in income tax will have a great significance in helping small and medium-sized enterprises stabilize and develop sustainably and long-term.

According to Ms. To Ai Vang, Deputy Head of Soc Trang Province, small and medium-sized enterprises currently account for about 98% of the total number of enterprises nationwide. Given the unpredictable impact on the regional and global economy, along with many internal difficulties, a 2% reduction in income tax will “have great significance in helping small and medium-sized enterprises stabilize and develop sustainably and long-term”.

According to Resolution 10/2017, Vietnam is expected to have 1 million enterprises by 2020 and this number will increase to 1.5 million by 2025. However, the whole country currently has only nearly 1 million enterprises, about two-thirds of the set target.

In Directive 10 dated March 25, the Government set a target of having at least 1 million more enterprises by 2030. Small and medium enterprises must increase in quantity, quality, scale as well as their contribution to the economy. This contributes to Vietnam’s target of high, double-digit growth in the coming period.

In response to the above proposal, a representative of the Ministry of Finance informed that the draft Law on Corporate Income Tax (amended) has proposed preferential tax rates based on the enterprise’s revenue.

Enterprises with revenue of less than 3 billion VND per year, the tax rate they have to pay is 15%. From 3 billion to 50 billion VND, the tax rate is 17%. Thus, these tax rates have been reduced by 3-5% compared to the current regulations (20%).

In addition, Ms. Vang cited the regulation in Point c, Clause 6, Article 13 on tax incentives for enterprises investing in and regularly employing over 6,000 workers. According to delegate Vang, the current regulation on the minimum number of workers to enjoy tax incentives is too high, causing difficulties for enterprises, especially enterprises investing in localities with low investment ratios. Therefore, the delegate proposed that the draft law consider reducing the minimum number of workers to over 3,000 workers.

The delegate emphasized that reducing the minimum number of employees will bring many benefits such as: promoting the effectiveness of preferential tax policies, creating incentives for investors; encouraging investment in areas and localities with development potential, contributing to promoting socio-economic development; creating favorable conditions for small and medium enterprises , helping them expand production scale and create more jobs.